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The Department of Justice (DOJ) recently withdrew three longstanding health care focused antitrust enforcement policy statements that had provided certain “safety zones” for mergers, joint ventures, group purchasing, and information sharing among industry participants.
Without these safety zones, regulators will likely increase antitrust scrutiny of dealings between health care industry players. They also may question previously sanctioned practices, especially around information sharing between hospitals, provider groups, payors, ACOs, and other health care delivery participants.
Health care companies should work with experienced antitrust counsel to assess how their practices will fare under new antitrust scrutiny, regardless of technical compliance with the now withdrawn safety zones.
What was withdrawn?
The DOJ withdrew the following policy statements:
What prompted the withdrawals?
The DOJ called the statements “overly permissive” as a result of significant changes in the health care industry. Assistant Attorney General Jonathan Kanter referred to the guidance as “out-of-date” and said the withdrawal was “long overdue” to ensure “enforcement efforts reflect modern market realities.” Doha Mekki, Principal Deputy Assistant Attorney General of the DOJ’s Antitrust Division, noted that “new technologies or other changes in market realities have altered the competitive value of different types of data” which made the “traditional guideposts . . . unhelpful” in assessing the potential competitive harm of certain information exchanges.
Like other recent antitrust policy withdrawals by both the FTC and DOJ, the DOJ did not indicate a plan to replace the guidance. Instead, it said a case-by-case approach would help it “better evaluate mergers and conduct in health care markets that may harm competition.”
The withdrawals are consistent with the Biden Administration’s heightened concerns about anticompetitive information-sharing in other contexts, such as through overlapping directorships, private equity portfolio companies, or using a third party to disseminate sensitive information.
How will this affect health care industry participants?
What should companies do?
Organizations should go back to the basics when assessing the antitrust risk of any arrangement. They should analyze the likely effects, both good and bad, of an arrangement on competition. Organizations should also:
Further Details on the Three Withdrawn Policies
When the Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area was announced in 1993, it was meant to resolve uncertainties and decrease health care costs by allowing deals and conduct that would create efficiencies. The original policy addressed antitrust enforcement regarding mergers and other joint activities among health care providers in six areas—expanding to nine areas in the 1996 updated policy.
Specifically, these policies addressed: (1) Mergers Among Hospitals, (2) Hospital Joint Ventures Involving High Technology Or Other Expensive Health Care Equipment, (3) Hospital Joint Ventures Involving Specialized Clinical Or Other Expensive Health Care Services, (4) Providers’ Collective Provision Of Non-Fee-Related Information To Purchasers Of Health Care Services, (5) Providers’ Collective Provision Of Fee-Related Information To Purchasers Of Health Care Services, (6) Provider Participation In Exchanges Of Price And Cost Information, (7) Joint Purchasing Arrangements Among Health Care Providers, (8) Physician Network Joint Ventures, and (9) Multiprovider Networks. For most of the nine areas, the policies provided antitrust “safety zones” which set forth circumstances where the DOJ and FTC would not, absent extraordinary circumstances, challenge conduct under the antitrust laws.
Two widely relied upon “safety zones” involved information sharing and group purchasing:
The 1993 and 1996 policies also set forth the frameworks for review of conduct outside the safety zones.
Similarly, the now withdrawn 2011 policy statement addressed conduct around the formation of accountable care organizations, or ACOs, under the 2010 Affordable Care Act’s Medicare Shared Savings Program, which enabled providers to work together. The policy set forth a safety zone for ACO participants with a combined share under 30 percent for each common service in each participant’s primary service area.
Even with the withdrawals, organizations can still reduce most antitrust risks by sharing only historical, sufficiently aggregated competitively sensitive information through independent third parties as opposed to directly with competitors. To mitigate the new enforcement risks, however, health care organizations also need to consider the specific circumstances of the participants and technology involved in any information-exchange.